Underlying US inflation last month rose by more than forecast, supporting the Federal Reserve's cautious approach to lowering interest rates.

The so-called core consumer price index — which excludes food and energy costs — increased 0.4% in January after a 0.2% advance in December, Bureau of Labor Statistics figures showed Wednesday. From a year ago, it rose 3.3%.

Economists see the core gauge as a better indicator of the underlying inflation trend than the overall CPI that includes often-volatile food and energy costs. The headline measure rose 0.5% from December and 3% from the year before. The BLS said nearly 30% of the advance was due to shelter.

The report incorporated new weights for the consumer basket to try to more accurately capture Americans' spending habits. The annual recalculation also subjects five years' worth of seasonally adjusted monthly data to revisions.

Wednesday's report serves as further evidence that inflation progress is in danger of reversing — which, combined with a solid labor market, will likely keep the Fed on hold for the foreseeable future. Policymakers are also awaiting further clarity on President Donald Trump's policies, particularly tariffs, which are already causing consumer inflation expectations to rise.

Source: Bloomberg